What's Up With This $33 Charge on My Water Bill?

Water system issues during the past several years, including new meters and billing disputes, have sparked a multitude of questions and frustrations among Ferndale residents, including: Why do we pay a $33 fee on each bill?

"I was told because the city needs money," resident Amelia Welby recently posted on the Ferndale Patch Facebook page. "What am I paying taxes for? Where does that money go?"  

The $33 charge on Ferndale residents' water bills is collected to ensure the city can pay the fixed costs of maintaining the system, officials said.

Fixed costs include bond payments, capital (infrastructure) improvements, employees, and the minimum payment Ferndale must make to the Detroit Water and Sewerage Department regardless of usage, according to Ferndale City Manager April Lynch and Public Works Director Loyd Cureton.

The Detroit Water and Sewerage Department supplies water to the city of Detroit and communities – including Ferndale – throughout Oakland, Wayne, Macomb, St. Clair, Lapeer, Genesse, Washtenaw and Monroe counties.

Cureton said even though Ferndale's population has declined in recent years, its fixed costs for water haven't changed.

The 2010 U.S. Census revealed Ferndale had 2,205 fewer people than it did in 2000, falling from 22,105 to 19,900. Even more concerning, in terms of keeping water bills low, Lynch said, is the loss of high-use industrial customers in Ferndale during the recent recession.

"The more users you have, the more costs are spread out," Lynch said. "As you lose users, it tends to bring the rates up because you still have capital costs and you have a minimum of water (you must buy from the Detroit Water and Sewerage Department)."

The minimum monthly payment Ferndale must make to the DWSD is $32,755, which equates to $393,060 annually, according to Ferndale Water System Supervisor Dan Harper.

Ferndale's Water Fund is an enterprise fund that must support itself, Cureton added.

In response to residents' concerns about water rates, Ferndale is in the process of comparing its fees, including minimum charges, to those of nearby communities and hopes to have results to present to the City Council sometime in early fall, Lynch said.

Municipalities throughout southeast Oakland County – including Ferndale's neighbors of Oak Park, Hazel Park and Pleasant Ridge – charge some form of a minimum fee.

But, the fees vary widely – depending on a host of factors including whether there is a dedicated millage to fund fixed costs, whether the water bill includes other services and population – which makes the fees nearly impossible to compare fairly, Pleasant Ridge Assistant City Manager Scott  Pietrzak said.

The minimum quarterly water bill for an average house in Pleasant Ridge, for comparison's sake, is $158; but the city's population was only 2,526 as of the 2010 census and its bills include fees for sewer, garbage and recycling services, he said.

The one thing that holds steady throughout all of the communities is costs, Pietrzak said.

"It doesn't matter where a water main break is, it costs the same (to repair)," he said. "If there is a water main break in Royal Oak (whose population was 57,236 as of the 2010 census), they have, for the sake of discussion, (approximately) 20,000 meters to spread the cost over, where I have approximately 1,130 meters.

"Their annual maintenance and upkeep charge is pennies where mine is dollars and it's the same in Ferndale," he said. "It is all very confusing. It is is even confusing for me."

Lynch said communities that have lower minimum fees could see their bills skyrocket in the event of an unexpected infrastructure failure if they do not have another method in place to fund repairs.

"We have been very diligent keeping up on capital improvements but some other communities may not have been," Lynch said. "People are trying to compare apples to apples, but you can't."